BlackRock: Buy Volatility

Equity-options volatility could rise in reaction to shifting Federal Reserve monetary policy or continuing instability in Ukraine and Middle East.

BlackRock, the world's largest asset-management firm, is telling clients that equity-options volatility is now the last cheap asset class in the financial market.

With the CBOE Volatility Index (VIX) at about 11.50, around half of its long-term average of 19, BlackRock is telling clients that the measure should be in the mid- to high-teens. This view is consistent with our previous recommendations that investors buy volatility in...